Revamp in AgriculturalDevelopment with particular reference to Food Security By: Pratik Singh(77) Rahul Swarnkar(79) Saurabh(90) Sayed Shakir M (91) Sudhir Kumar(101)
Introduction• Ever since independence in 1947, agricultural development policies in India have aimed at reducing hunger, food insecurity, malnourishment and poverty at a rapid rate• The policies and programmes related to marketing and trade were guided by the overall objective sought to be achieved from the agricultural development strategy• It helped India tide over the severe food crisis of mid-1960s within a period of one and half decades• Also proved its appropriateness in the wake of economic liberalization and globalization since the early-1990s• India’s experience has provided several lessons for the countries that are struggling to come out of the poverty- malnutrition-hunger trap.
Global Scenario of Hunger and Food• Hunger and food insecurity has been one of the highest priority issues ever since the World Food Summit (WFS)• It had set a target of reducing the number of hungry and food insecure to half (842 million in 1990-92) by 2015• Later, the UN Millennium. Declaration of 2000 set eight Millennium Development Goals (MDGs)• The rise in food prices since the end of 2006 aggravated the situation of hunger worldwide• The rise in food prices since the end of 2006 aggravated the situation of hunger worldwide• On the supply side, while cereals stocks were at the lowest levels in three decades• On the demand side, increasing use of sugar, maize, cassava, oilseeds and palm oil by the emerging biofuels industry
India’s Food Security: Approach and Status Approach to Food Security• Food security has been the focus of agricultural development strategy in India ever since mid-1960s• The new strategy aimed at maximizing the production of cereals• It involved three key elements, viz. (a) provision of an improved technology package to the farmers; (b) delivery of modern farm inputs, technical know-how and institutional credit to the farmers; and (c) assurance of a remunerative marketing and pricing environment for farmers.
Dimensions of Food Security• Food security is achieved when ‘all people at all times have physical and economic access to food that is sufficient to meet dietary needs for a healthy and productive life’• The status of food security of a country needs to be assessed at three levels: The availability of food at national level on sustainable basis, The physical and economic access of all households to food The utilization of available food by individuals
Macro Food Security• Increase in national production of staple food, i.e. cereals• The growth rate of cereal production has kept pace with the growth of population and cereals demand• The dependence on imports was almost eliminated• In addition to the increase in domestic cereal production, the inter-year instability in production was reduced considerably 1. The irrigated area under cereals expanded considerably 2. The share of more stable grains (wheat) increased while that of unstable grains (coarse cereals) decreased.• 96.5 per cent of the incremental output of cereals between TE 1964-65 and TE 2006-07 was due to improvements in the per hectare productivity (yield); and area expansion, accounting for only 3.5 per cent
Household and Individual Food-SecurityThere has been a considerable improvement in physical access of households tofood in different parts of the country (rice ,PDS, roads, storage facilities)Continuous improvement in the economic access of consumers to food -increase in retail prices of two staple food items has been lower than theincrease in per capita income. (15.4 % in 73-74 to 4 % in 08 for 100 kg wheat)Improved availability of staple food at the declining real prices has contributed toimproved nutritional-security. • farmers have shifted from the low-yielding coarse cereals to non-cereal food products since the middle of 1980s • helped to increase production and availability of sugar, fruits, vegetables, spices, milk, eggs, meat and fish/fish products • As the production growth of all these food items was considerably higher than the population growth, per capita production of nutritive foods went up substantially
Household and Individual Food-SecurityThe per capita consumption of cereals has also tended to drop in recent years • The decline in consumption has been sharper in coarse cereals, and has occurred even among the lowest 30 per cent of consumers, reflecting a shift towards more nutritive foods like fruits, vegetables and livestock products. This shows improvement in the nutritional levels.There has been considerable reduction in hunger or non-availability of food at thehousehold level. • As per large sample surveys of NSSO, the percentage of households not getting enough food daily even in some months declined from 16.2 per cent in 1983 to 4.2 per cent in 1993- 94, to 2.6 per cent in 1999-00 and to 1.9 per cent only in 2004-05Economic poverty is an important factor affecting food security at the household level.Over the years, the incidence of poverty, in both rural and urban areas, has declinedconsiderably. • The percentage of population below poverty line declined from 51 per cent in 1977-78 to 39 per cent in 1987-88, to 26 per cent in 1999-00 and further to 22 per cent in 2004-05.
Long Way to GoThough over the years, the country has been able to reduce hunger, 0.3 per centhouseholds still report inadequate availability of food. This implies a population of3.3 millionThough, economic poverty has been reduced to 22 per cent of the population, itimplies that 230 million persons are still poor in IndiaThough the proportion of under-nourished population has come down to 20 percent, nutritional status of children and women continues to be a cause of concern.Nearly 48 per cent of the under-3 children suffer from malnutrition and 39 per centof the women suffer from energy deficiency, leading to both high infant and maternalmortality rates
Food for Work, Employment Guarantee and Right to FoodThe Food for Work Programme was started in 1977-78 – several modifications ofrural wage employment programmesIn September 2001, different programmes were merged into an umbrellaprogramme called SGRY (Sampoorna Gramin Rozgar Yojana – ComprehensiveRural Employment Scheme) • Under SGRY, the works taken up were labour-intensive, wages were equal to statutorily prescribed minimum wages by provincial (state) governments, and wages were paid in the form of 5 kg of food grains (at subsidized prices) plus cashIn February 2006, a National Rural Employment Guarantee (NREG) scheme waslaunched in 200 most backward rural districts under NREG Act passed by theParliament. Under the NREG Scheme, at least one member of a rural family isguaranteed employment for 100 days in a year • Since April 2008, it has been extended to the entire country (588 rural districts)
Current Marketing and Trade EnvironmentAgricultural marketing system and trade policy affect the prices receivedby the farmers and, in turn, influence the profitability of agriculture.Profitability of farming is the sum total of profitability of individual farmenterprises that include crops, horticultural enterprises, livestock andfisheries.For each enterprise, the profitability is the net outcome of physical input-output ratio (or total factor productivity) and relative prices of inputs andoutputs. • Physical input-output ratio depends on the state of technology available and adopted by the farmers (varieties, quality of seeds or planting material or feeds, dosages of inputs, and agronomic and protection practices) and weather conditions. • The relative prices of inputs and output are determined by the market structure and efficiency of the marketing system for essential inputs and output
Price Policy and Support for FarmersThe main objectives of price policy are – • to provide incentives to farmers for adopting new technology and maximizing production • to safeguard the interests of consumers or users of farm products by maintaining market prices at reasonable levels • to keep the fluctuations in prices within certain limitsThe main instruments of price policy, inter alia are minimum supportprices, buffer stocking, and operation of a public distribution system ofcerealsThe main challenge of the policy has always been to reconcile theconflicting price interests of farmers and consumers • It is partly achieved through the provision of food subsidy and supply of essential farm inputs (fertilizers, electricity and canal water) to farmers at reasonable prices or user charges
Review of current price policy regimeContinuation of the policy of maintaining self sufficiency in cereals.Continuation of the system of minimum support prices and making it effective in all thestates/areas of the country.Continuation of the policy of buffer stocking of cereals and their subsidised distribution formaintaining price stability.Retaining Food Corporation of India as the national food grain handling agency on behalf of theGovernment of India.Fixing the minimum support prices at a level 50 per cent higher than the cost of production.Dovetailing of domestic price policy with trade policy by renaming the CACP and redefining itsterms of reference.Assigning statutory status to CACP.Phasing out of levy on rice millers and sugar factories.Switching over to universal PDS from the present system of targeted public distribution of cereals.
Public Distribution System (PDS) of CerealsFor a clearunderstanding of • Buffer Stocking of Rice and WheatIndia’s PDS of food • Distribution of Subsidized Cerealsgrains, one needs to • Supplementary Nutrition Programmelook at buffer (SNP)stocking, provisions • Mid-Day Meals (MDM) for Schoolof targeted PDS, Childrensupplementarynutrition and mid-day • Size of PDSmeals programme, • Food Subsidysize of PDS, and foodsubsidy involved
Buffer Stocking of Rice and WheatGovernment of India maintains stocks of rice and wheat to meet therequirements of publi distribution system and also for open market sales toreduce the fluctuations in pricesThe stocks are built up mainly through price support operationsOccasionally, import route is also used to build-up the stocks.The size of minimum normal stocks is determined every five years by anexpert group and is guided by the degree of inter-year fluctuations inproduction and government’s commitment for PDS.The actual stocks at a point of time differ from the norms due to a variety offactors
Distribution of Subsidized CerealsThe distribution of subsidized rice/wheat is supplemental in nature anddoes not intend to meet the entire requirement of a family.The system is operated under the control of state governments.The foodgrains are distributed to target groups at different prices througha network of 4,62,000 shops spread throughout the country.The target groups have been issued ration cards for buying subsidizedgrains.There are four categories of entitled citizens (non income tax payee)under PDS
Supplementary Nutrition Programme (SNP)The objective of SNP is to alleviate or prevent malnutrition among vulnerablechildren below 6 years and expectant or nursing mothersThe programme was launched in 1975 and now covers 4.8 million mothersand 22.9 million children through a network of 4200 projects covering 75 percent of development blocks in the rural areas and 273 slum pockets in theurban areasAccording to nutritional needs, hot meals or snacks, along with other items(vitamins and iron tablets, etc.) are provided through childcare (Anganwadi)centres established in the locality with a local lady as the in-charge
Mid-Day Meals (MDM) for School ChildrenThe MDM programme was taken-up as a nationalprogramme of nutritional support to children undergoingprimary education in 1995.It has twin objectives of improving the nutritional status ofprimary school children and of increasing enrolment,regular attendance and retention in schools.The foodgrains are supplied by the central governmentfree of cost to the state governments, while the transportand cooking costs are borne by the state governments.
Size of PDSThe quantities of subsidized cereals distributed under PDS have increasedconsiderably during the current decadeDuring 1960s and 1970s, the distribution was around 10 Mt of foodgrains peryear. It was around 15 Mt per year during 1980s and 1990s.Since 2002, the commitment under PDS has been increasing with annualaverage distribution going up sharply to around 39 Mt during 2002-05.Out of the total distribution of subsidized foodgrains during the past fouryears, nearly 82 per cent went to below poverty line families.
Food SubsidyFood subsidy is the difference between MSP plus handling/distribution expenses incurred byFood Corporation of India (FCI) and the issue prices of foodgrains under PDS.This is the amount disbursed by the government to FCI for its procurement, handling anddistribution activities.In India, the food subsidy has served the multiple objectives of minimum guaranteed prices tothe farmers, maintenance of buffer stocks, supply of subsidized foodgrains under identifiedschemes of the government, and occasionally open market sales for stabilizing market prices.The magnitude of food subsidies is, therefore, linked to the scale of operations for achieving theabove-mentioned national objectivesDuring 2007-08, the food subsidy, as reflected in the Union Budget, was Rs 254 billion,accounting for 0.62 per cent of GDP
Farm Input Delivery• Seeds - ICAR and SAU• Private seed companies- 58% produce in 2006-07• Fertilizer consumption increasing- 12.7Mt(1992) to 22Mt(2007)• Plant Protection Chemicals declining due to- disease resistant varieties, bio-control practices and pest mgmt.• Chemical Pesticides- 72k tonne(1991)to 38k tonne (2007)• Electricity – from 96b kWh(1982) to 386b kWh(2005)- 23% of total electricity consumption
Regulation of Marketing Systems• Movement restrictions• Export and Import Liberalized• Contract farming allowed• Minimum Support prices• Entry of organized retail trade allowed
Growth rates of Indian economy and agriculture sector 10 9 8 7 6 5 4 Total Economy 3 2 1 Agriculture and allied 0 secors
Concerns Relating to Production Performance1. Sharp Deceleration since early 90’s 1. Net sown area, gross cropped area negative 2. Deceleration of fertilizer-use 3. Growth in terms of trade turning negative2. Weakening of macro food security3. Profitability4. Marketing Systems Improvement5. Soil and Land Degradation6. Increase in Imports
New policy Initiatives and Programs• A National Food Security Mission (NFSM)• Rashtriya Krishi Vikas Yojana (RKVY)• In 2007, a national policy for farmers including asset reforms, use of biotechnology and ICT, bio-security system, seed and soil health, credit, insurance, higher support prices for farmers, and enlargement of food- security basket• Farm Credit Package – credit cards to 72million farmers• The crop, weather and livestock insurance schemes• Rural districts equipped with ‘Farm Science Centre’• Govt. waived INR 720million loan to relief 40million farmers• Substantial hike in support prices for rice and wheatSource: Agricultural Economics Research Review Vol. 22 January-June 2009 pp 1-19
New initiatives & expansion programmes atdifferent stages of implementation (GoI, 2007):• Bharat Nirman (India connectivity and infrastructure programme)• Watershed Development and Micro Irrigation Programme• Establishment of National Rainfed Area Authority• Establishment of National Fisheries Development Board• Establishment of National Bee Board• Revitalization of Cooperative Sector• Enactment of Integrated Food Law and setting up of Food Safety and Standards Authority of India (FSSA)• Agri-business Development through Venture Capital Participation Schemes• Legislative Framework for Warehousing Development and Regulation• Protection of Plant Varieties Regulation and Farmers’ Rights Act• Establishment of Bamboo Mission• Increasing Knowledge Connectivity through Common Service Centres and IT Initiatives• National Rural Health Mission
Conclusions and Suggestions• Production Environment and Policy – Investment in agricultural research – Investment in productivity-raising in fracture – Shifting to land-saving enterprises (Livestock & Fisheries, High Value Crops - Horticulture) – Adequate and efficient mechanism of transfer of new technology – Training of farmers and provision of appropriate technology – Efficient system of entire chain of marketing from farm- gate to consumers – Investment in rural roads and marketing infrastructure – Farmer-friendly marketing, pricing and trade policies
Contd…• Marketing Policy and Production System – Investment on rural roads - A link in marketing of farm products – Improving farmers - Access to modern market – Increasing farm-gate and retail linkage through contract farming – Evolution and development of SCM – Developing shock resistance crops• Pricing and Trade Policy – Persuasion of MSP and it’s effective implementation – Dovetail the ‘Agricultural Commodities Trade Policy’ with ‘Domestic Price Policy’ – The Policy of liberal import at low duties• Other Policies – Legalizing land-lease market – Migrant-Friendly policies for Rural-Urban migrations
REFERENCES• Food Security and Indian Agriculture: Policies, Production Performance and Marketing Environment Shabd S. Acharya Institute of Development Studies, Jaipur - 302 004, Rajasthan Agricultural Economics Research Review Vol. 22 January-June 2009 pp 1-19